Royal Bank of Canada said that software in use since April is helping it better gauge the profitability of its customers.

The Toronto bank says it has changed the profitability rankings of 75% of its 10 million retail clients.

"The impact is significant," said C.F. "Cathy" Burrows, senior manager for client segment management at Royal Bank. "We've shifted to thinking about client value instead of market share."

Royal Bank uses the software, based on NCR's Value Analyzer, to divide customers in 30 countries by attitudinal and behavioral factors, current and potential profitability, expected purchasing behaviors, vulnerabilities, and channel preferences.

Each week at Royal Bank a 20-member "client decision strategy" team meets. Information from these sessions is loaded into the Client Current Value Measurement -- the bank's version of Value Analyzer -- to formulate direct marketing and telemarketing programs.

As a result of the research, the bank has repriced several services and created income statements, balance sheets, and portfolios for clients. "We're working with an increasingly sophisticated share-of-wallet" measurement, Ms. Burrows said.

Another result was the bank's decision to support student loan customers through unprofitable times. "It demonstrated to management the clear positive value to us of staying the course where other financial institutions have exited the business," Ms. Burrows said. "We needed to work with these relationships."

Installing the software took a little more than six months, with much of that time devoted to customizing business rules.

"Value Analyzer allows organizations to use the tool immediately and improve their methodologies over time," said Kathleen Khirallah, a senior analyst at Tower Group.

The bank says it had suffered from policies poorly tailored to its customers. "For the past year, we've been trying to undo the damage we introduced with activity-based costing," Ms. Burrows said.

SAN DIEGO -- HNC Software Inc.'s financial solutions division said Banco Bilbao Vizcaya Mexico, a unit of Spain's largest bank, has installed its Falcon fraud detection system.

The in-house adoption is a test preceding the system's anticipated introduction in Latin America and Europe.

The bank's Mexican credit card processor has already been using Falcon.

"We have been so impressed that we decided it would be advantageous for us to migrate the system for in-house use," said Leandro Vela, systems and operations director at BBV Mexico, which has 421 branches and $7.2 billion of assets.

HNC also announced the formation of an alliance with Onyx Technologies Inc. of Atlanta.

The tie includes an equity investment by HNC in Onyx, an application service provider to the wireless telephone and private-label card industries.

The companies are jointly developing a "loan decisioning service" for the financial services industry.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.